COMMISSIONER OF INCOME-TAX VS UNITED TRADING AND CONSTRUCTION CO.
2001 P T D 2450
[247 I T R 819]
[Supreme Court of India]
Present: B. P. Jeevan Reddy and S. B. Majmudar, JJ
COMMISSIONER OF INCOME‑TAX
Versus
UNITED TRADING AND CONSTRUCTION CO.
Civil Appeal No.787 of 1977, decided on 20/09/1995.
Income‑tax‑‑‑
‑‑‑‑Voluntary disclosure scheme‑‑‑Cash credits in accounts of assessee‑‑ Subject‑matter of disclosure made by depositors or creditors‑‑‑Explanation of assessee about genuineness of cash credits in assessee's books ‑‑‑Not satisfactory‑‑‑Officer not prevented from adding to assessee's income‑‑ Indian Finance (No.2) Act, 1965, S.24.
Immunity enjoyed by the declarant under section 24 of the Finance (No. 2) Act, 1965, under the Voluntary Disclosure Scheme is confined to the declarant alone and is not extended to the assessment of a third party assessee in relation to the income disclosed by the declarant. There is nothing in section 24 which prevents the Income‑tax Officer, if he is not satisfied with the explanation of the assessee about the genuineness of the sources of amounts credited in his books, in spite of these having been made the subject‑matter of declarations by the depositors/creditors. From including them as income of the assessee from undisclosed sources.
ITO v. Rattan Lal (1984) 145 ITR 183 (SC) fol.
[The Supreme Court accordingly deemed the question of law sought by the Department, viz., whether the cash credit in the assessee's accounts stood explained in view of the disclosure made by the creditors under the Finance (No.2) Act, 1965, as having been referred to the High Court, withdrew the matter to itself and answered the question in favour of the Department].
G.C. Sharma, Senior Advocate (S.N. Terdol, Advocate with him) for Appellant.
ORDER
The respondent was represented by Mr. M.N. Sharma, Advocate. On the death of the said Advocate notice was sent to the respondent apprising him of the said fact and asking him to make alternate arrangement. The letter has come back with the endorsement "left". This was in January, 1995. We treat it as sufficient service and proceed with the matter.
This appeal is preferred against the order of the Delhi High Court rejecting the application of the Revenue filed under section 256(2) of the Income Tax Act, 1961. The question which the Revenue wanted to be referred by the Tribunal reads thus:
"Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the cash credit amounting to Rs.25,000 stood explained in view of the Disclosure made by the creditors under section 24 of the Finance (No.2) Act of 1965?
Is the order of the Income‑tax Appellate Tribunal not vitiated in view of the provisions of section 68 of the Income Tax Act, 1961?"
It is now brought to our notice that this very question has since been decided by this Court in ITO v. Rattan Lai (1984) 145 ITR 183. In the said decision it has been held that the immunity enjoyed by a declarant under section 24 of the Finance (No.2) Act, 1965, under the Voluntary Disclosure Scheme is confined to the declarant alone and is not extended to the assessment of a third party assessee in relation to the income disclosed by the declarant. It was further held that there is nothing in section 24 of the Finance (No.2) Act which prevents the Income‑tax Officer, if he is not satisfied with the explanation of the assessee about the genuineness of sources of amounts found credited in his books to add them to the assessee's income amount in spite of these having already been made the subject‑matter of the declaration made by the depositors/creditors, He is entitled to include them as income of the assessee from undisclosed sources.
In view of the said decision, the appeal .is allowed. The question shall be deemed to have been referred to the High Court, which we withdraw to this Court and answer 'the same in the negative, i.e., in favour of the Revenue and against the assessee. No costs.
M.B.A./1008/FCAppeal allowed.